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Mid-Day Gold & Silver Market Report – 3/7/2012

3/7/2012 12:22:14 PM By: Timothy Oakes

OPTIMISM SEEN IN GREECE; CHINA RAILS AGAINST U.S. TRADE

Precious metals have maintained their positions in positive territory today. The euro recovery and physical demand out of Asia are keeping prices higher. The jobs data announced earlier today and the growing support for consolidating Greek debt has helped the overall outlook for Gold. Trader Frank Lesh said, “There is some positive news out there for the economy, and that is helping Gold. … Some investors are back after the big fall.”

With the deadline looming for private Greek bondholders, the number of voluntary participants has increased to about 58 percent of investors agreeing to take the hit. The growing percentage supports the likelihood that CACs (Collective Action Clauses) will not need to be implemented. Christoph Rieger with Commerzbank wrote in a note, “Adding up the commitments to participate in the Greek PSI, it is now clear that the CAC hurdles will very likely be cleared.” But some investors are holding out hope that their bonds may have a return of face value, are opting not to participate, and expect CACs to be put in place. Investor Patrick Armstrong said, “I do fully expect to be part of the collective action clause.” The optimism over Greek is helping the outlook for other countries of concern, such as Spain and Italy. Their bond percentages continuing to move away from the crisis mark.

President Barack Obama is set to sign a bill into law today that is proving to be quite unpopular with the Chinese Commerce Ministry. This is something the president is looking to do to protect American jobs by signing the bill authorizing duties to be imposed on subsidized goods from China and Vietnam. However, in a news conference, Chinese Commerce Minister Chen Deming said, “We follow the rules of the WTO, but we have no obligation to follow domestic laws or regulations in any specific country that go beyond international rules. … Why did the U.S. have a $700 billion overall trade deficit? Why did China have an overall trade surplus of only $150 billion but a trade surplus of $200 billion with the United States. … Every man, free from prejudice and armed with common sense economics, can come to the right conclusion.”

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